Setting up an estate plan can seem daunting – who wants to think about death, right?
Unfortunately, death is one thing that we can all be certain of, so having our affairs in order is a necessity to ensure that our wealth and assets are dealt with and distributed in the way that we desire when we are gone.
However, an estate plan is not something that you just set up and forget; a crucial mistake made by many. It is important to review and adjust your estate plan over time so that it evolves with you and your life circumstances accordingly.
Most legal professionals recommend reviewing your estate plan every 3-5 years, or any time that you experience a major life-changing event.
We highlight some of the key reasons following which you should review and update your estate plan:
1. Advancing age
As you approach later life, you may want to think about decisions and plans for end-of-life, and who will be making decisions on your behalf during that time. Furthermore, you may have lost an heir during your lifetime, which will ultimately adjust the distribution of inheritance to current beneficiaries.
2. Change of name
If you change your name by marriage then you don’t necessarily have to change/update estate planning documents. In this case, you could retain copy of the legal paperwork that reflects the change of name (whether that be a marriage certificate or other legal document). However, if the change of name is the result of a remarriage then you may want to change it in your plan for personal reasons.
3. Catastrophic illness (self)
A catastrophic illness can be defined as a severe or sustained illness that is life threatening or results in significant disruption to one’s life. In the event of catastrophic illness (expected or unexpected), there should be a course of action which will assist with both financial and medical decisions. It’s important to understand what catastrophic illness is, and how it is a critical inclusion in your plan.
4. Illness or disability (spouse or dependant)
Illness or disability of a spouse or dependant may cause a change in your estate plan, as you may want to establish a trust to ensure that care continues for them should something happen to you. You may also prompt a Power of Attorney, which appoints someone to make financial/medical decisions for those individuals on your behalf.
5. Death (Spouse, dependant, beneficiary, executor or guardian)
In the event of the death of a spouse, dependant, beneficiary, executor or guardian, it is highly recommended that you review your plan to ensure it still reflects your life. For example, if someone you have appointed as your Executor or Beneficiary dies, then someone else will need to be appointed to replace him/her accordingly.
6. Marriage / Remarriage
Entering into a marriage, or a new marriage, means that you will have a spouse, and potentially children from a previous relationship, to consider for instances such as inheritance, lasting powers of attorney or your will.
The marriage of a child should also trigger a review, to avoid your new son/daughter-in-law potentially gaining control over inheritance intended for your child only.
7. Divorce (mandatory)
As with marriage, divorce is a vital event that can happen in one’s life. Action should be taken if your divorce is proceeding, particularly if you do not wish your ex-spouse to benefit from your estate in the event of your death.
8. Births / Adoptions
If you decide to have children or adopt a child, naturally you will want to take care of their needs in the future. Consider naming a guardian for a child should anything happen to you before they reach the age of eighteen. A properly drafted estate plan can provide protection from financial immaturity, potential divorce and a catastrophic financial event or illness.
9. Relocation (to another jurisdiction) / Change of address
If you move to another jurisdiction, you will need to consult with a legal representative to ensure that the provision in your estate plan is still applicable in your new jurisdiction. A new property is a new asset, in a new jurisdiction – ensure this asset is titled appropriately in your overall plan as well as who you intend to inherit it.
10. Executors or trustees become inappropriate
The executors and the trustees are the people appointed to implement your plan and more often than not, determine its success.
Careful consideration should be made when making these appointments, however be conscious that their circumstances can also change. Are they still willing and able to perform the role as you wish or expect? Have they aged or passed away? Have the fundamentals of your plan changed and consequently appointing someone else could be a better choice?
It is about who you trust to execute your plan as you wish.
11. Your Assets or Liabilities
Sale of property (gifted in the estate plan) – the sale of an asset that is a major part of an estate plan will result in the reassessment of your plan as the distribution of provisions will change.
Changes in the value of your estate – Has there been a significant change in the value of your estate since your plan was drafted? Whether your estate’s value has substantially increased or decreased, you need to review how such property is divided and whether your plan is still a true reflection in light of recent changes.
Purchase of foreign property – Prior to purchasing a foreign property you need to think about the impact it may have on the execution of your plan. One of the key considerations is ensuring compliance with the laws of the jurisdiction in which any asset is located.
For example, Portuguese law imposes ‘forced heirship’ which means a fixed portion of your estate will automatically be passed to your direct family. Therefore, it is crucial to ensure your wishes are fulfilled by establishing specific arrangements in advance.
Therefore obtaining the appropriate professional advice in relevant jurisdictions before you make any changes to your plan is imperative.
Starting, buying or selling a business or entering into a partnership – Starting a new business, or selling an existing one, can have major ramifications on an estate plan.
You should always seek advice from a legal representative to discuss any possible impact it might have on your estate plan and gain assistance in the creation of an effective business succession or exit plan to reflect such changes to your circumstances.
Digital Assets –Digital technology consumes most of our daily live these days, so it is important to not forget any digital assets you own when creating your estate plan.
This may include things such as online accounts (email/social media etc.), websites, online subscriptions and even cryptocurrency accounts and/or digital wallets. Inclusion of these within your estate plan can protect them from risk and potential identity theft.
Give yourself peace of mind
Having your affairs in order leaves you safe in the knowledge that your loved ones are looked after and that your estate will be distributed to them in the way that you want, whilst reducing any uncertainly for their future and minimising the possibilities of dispute and/or challenge of your wishes when you are gone.
However, it is important to remember that estate plans should not be static; they are designed to grow like you and change with you over time.
At Sentient International, we can establish a range of solutions and structures suitable for effective estate planning, including Companies, Trust and Foundations. If you would like more information on our services and how we can assist you, please contact us by telephone +44 1624 616544 or via email at info@sentientinternational.com.
